Q3FY26 Cement Preview: Axis Sec sees volume, revenue growth on weak pricing

Cement companies are expected to report robust topline and volume growth amid weak pricing power during the third-quarter of the financial year 2026

Cement companies will likely report robust volume and topline growth in the third quarter of the financial year (Q3FY26) on the back of resilient demand and higher realisation, Axis Securities said in its earnings preview report for the sector. 

 

Ambuja Cements, JK Cement, Dalmia Bharat, Birla Corporation, JK Lakshmi Cement, UltraTech Cement, Star Cement, Shree Cement, along with other cement companies, may report an increase in revenue and volumes, the brokerage said. 

 

Individually, JK Lakshmi Cement is expected to report a decline in the gross margin during the quarter. Axis Securities estimates its Gross Margins to be at 34.6 per cent in the third quarter, compared to 35.5 per cent in the preceeding quarter. 

 

 

Ambuja Cements and UltraTech Cement, meanwhile, may report contractions of 5 per cent and 3 per cent, respectively, in their realisations, according to Axis Securities.

 

Axis Securities expects Star Cement to report the highest net profit growth during the third quarter because of better earnings before interest, tax, depreciation, and amortisation (Ebitda) and realisations, followed by HeidelbergCement India and Birla Corporation.

 

For an investment viewpoint, Dalmia Bharat, JK Lakshmi Cement, and UltraTech Cement are the top picks of the brokerage. 

 

Axis Securities view on cement sector

 

Strong demand

 

Axis Securities expects growth volume to be robust in the third quarter (Q3FY26) and throughout the entire financial year, because of strong demand conditions. Housing and government-led infrastructure spending will drive the demand growth. 

 

Axis Securities is seeing an 11 per cent Y-o-Y growth in demand for the cement sector. Rural demand is expected to surpass the urban demand, given the above-average monsoon and wage growth. 

 

The recent Goods and Service Tax (GST) rate cut to 18 per cent will likely act as a long-term growth driver, Axis Securities said, expecting the reduction in the indirect tax to reduce the cost for first-time buyers. The brokerage estimates tax burden to have decreased by ₹30-₹35 per bag based on the second-quarter prices.  

 

The tax relief, along with the government’s ‘housing for all’ mission, underpinned Axis Securities’ demand outlook for Tier II and Tier III cities in the second half of the fiscal year (H2FY26). 

 

​Cement pricing

 

​Sequentially, cement prices declined 1–2 per cent in the third quarter (Q3FY26), because of heightened competition and Goods and Services Tax (GST) rate rationalisation. The overall pricing scenario remained weak during the quarter. 

 

Nevertheless, the industry maintained a 1 per cent Y-o-Y growth in realisations, underscoring the resilience of the pricing floor established in the previous year.

 

"Pricing power remained limited due to intensifying competition, aggressive capacity addition, and a strategic shift towards volume growth over realisation," Axis Securities said. 

 

With the industry heading to the busiest construction session in the fourth quarter (Q4FY26), manufacturers are adopting a value-driven strategy, with a planned price hike of ₹10–₹20 per bag to cushion profit margins.    ===========  Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.